Quantitative analysts or “quants” working in the financial industry use mathematical and statistical techniques to study, measure and evaluate financial instruments, financial markets and the behavior of market participants. Quantitative financial analysts work with all types of companies in the securities industry, including commercial banks, investment banks, wealth management companies, and hedge funds. Insurance companies, management consulting firms, accounting firms, and financial software firms also employ quantitative analysts.
While a quantitative analyst’s approach can vary quite a bit from job to job, the basic job generally revolves around developing and building mathematical models designed to provide information about complex financial systems. These models can be used to value securities and derivative instruments, to inform the timing of transactions, or to assess and manage various types of financial risk. Whatever the focus of the work, the information and insights produced by quantitative analysis are generally used to develop and carry out investment strategies and to inform the decision-making of the company’s investment managers or its investment clients. .
- Quantitative analysts working in the financial sector use statistical and mathematical techniques to evaluate economic data, financial instruments, and markets.
- Quantitative financial analysts work at commercial banks, investment banks, wealth management firms, and hedge funds, among many others.
- Earning a degree in physics, engineering, computer science, or applied mathematics will help hone your quantitative skills before entering the workforce.
Some quantitative financial analysts begin working in entry-level roles as research analysts after completing a bachelor’s degree in a field that provides practical quantitative skills, such as statistics, finance, or economics. However, these positions do not typically lead to long-term permanent careers in the field. Rather, junior quantitative research analysts typically go back to school or transition into closely related jobs, such as investment analyst positions researching companies and stocks.
In the securities industry, quantitative analysts are generally hired for their expertise in complex mathematical modeling techniques, skills that require many years of training to develop. Consequently, most quantitative analysts arrive in the field after completing a master’s or doctorate degree. The best candidates for analyst positions typically have doctorates and experience conducting independent research and designing mathematical models.
What does a quantitative analyst do?
A long-term career as a quantitative analyst generally requires a graduate degree in a quantitative field such as finance, economics, mathematics, or statistics. Degrees in theoretical physics, engineering, computer science, and other fields that provide high-level training in mathematical modeling and other advanced quantitative techniques may also be acceptable. Some doctoral-level professionals who want to transition to the finance industry from quantitative careers in nonfinancial fields choose to go back to school to pursue a master’s degree in specialties such as financial engineering or mathematical finance.
The average salary for a quantitative analyst in the US as of October 2021, according to Glassdoor.com.
Other qualifications and skills
Few employers in this field require candidates for a position to have a professional certification. However, some positions may require an appropriate license from the Financial Industry Regulatory Authority (FINRA), the organization in charge of overseeing securities firms and brokers in the United States. To begin the FINRA licensing process, a candidate must generally have official sponsorship from their employer. As a result, the licensing requirements for a position are generally handled after a new hire begins work.
Most quantitative financial analysts must have a high command of database administration skills and computer programming skills that are used to develop and implement mathematical models. The C ++ programming language is generally considered the most important in the field, although the requirements vary by position. Other programming languages used in the field include Python, SQL, C #, Java, .NET, and VBA. Quantitative financial analysts should also have experience in a statistical analysis software package, such as Matlab, R, S-Plus, or SAS. Advanced Excel skills are also required.
Analysts must have excellent verbal and written communication skills. In addition to developing new mathematical models and analytical approaches, analysts must be able to document and present the results of their work to other members of the company so that they can be used in day-to-day business. Analysts may be required to work with technical staff to design appropriate systems to run the models they create. Analysts should also expect to communicate with the firm’s management and various business units to establish research and design priorities.